Should You Consolidate your Debt?

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Should You Consolidate your Debt?

Multiple bills, interest rates and due dates can make your head spin. It could be time to act if your debt negatively affects your life.

Debt consolidation combines your outstanding debts into one new payment. You may be wondering, “Is debt consolidation worth it?” Before you embark on your debt-free journey, review our tips below to help figure out whether debt consolidation could be the right move for you.

Consolidating your debt may be a good idea if you have:
  • Sizeable high-interest debt. Numerous loans with large balances can put a strain on your finances. Even if you are committed to paying them off a little at a time, high interest rates may force you to pay more than your actual balance. 
  • A good credit score. According to MyFico, a good credit score falls between 670 and 739. Often, a credit score in this range is required to be approved for a balance transfer credit card
  • A well-thought-out payoff strategy. A Visa® Balance Transfer usually offers a low introductory annual percentage rate (APR) for a set period of time (i.e., the first three, six, or 12 billing cycles). After those cycles, the rates can significantly increase This temporary rate means you need a solid plan in place to avoid accruing additional interest on your debt Avoid these five mistakes when paying off your debt and plan to meet with your Members 1st MyConcierge™ if you need help putting together a debt repayment plan.
Debt consolidation may not be a good idea if you have:
  • Small and manageable debt. This type of debt is low-interest debt that you can pay off within a year. Use our debt consolidation calculator to figure out your monthly payment with a consolidated loan and if it’s worth it to consolidate.
  • A low credit score. As mentioned, a low credit score may keep you from qualifying for a Visa Balance Transfer. If you are unhappy with your current score, try these six ways to improve it.
  • Tendencies to overspend. he goal of transferring your debt is to pay it down, not increase it. Thus, natural-born spenders should be serious about getting out of debt and changing everyday spending habits. If you are not ready for this life change, start with six easy saving strategies to help you create better money habits

If you choose to tackle your debt, Members 1st is here to support you every step of the way with many debt consolidation options. You can, transfer debt your balance to one of our low-interest credit cards or even leverage your home's equity with one of our Home Equity products that can offer lower interest rates.


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